Encouraging Signs

The Wall Street selling frenzy resumed this week, reaching its apex on Wednesday afternoon. A last-minute wave of buying brought the day's closing numbers into a more respectable range and set up today's gains in the major benchmarks. Perhaps the low is now behind us, but we have not yet seen anything that looks like "capitulation" selling. More short-term weakness won't be surprising.

An encouraging sign is that the S&P 500 successfully tested its 200-day moving average and appears, albeit slowly, to be climbing back into more bullish territory. The long-term uptrend remains intact. Nonetheless, short-term and intermediate-term indicators are bearish and it may take some time, and more downside, before the benchmarks once again see new highs.